Acting IRS Chief Resigns After Refusing to Comply With Illegal Immigrant-Sharing Deal
The acting chief of the Internal Revenue Service is set to resign after opposing a new policy that would allow the sharing of taxpayer information concerning illegal immigrants with federal law enforcement agencies.
Melanie Krause, the IRS Commissioner, will be the third leader to depart the agency since the beginning of the year. The IRS has been experiencing significant instability, largely due to left-wing activists who have prioritized their political agendas over their responsibility to remain neutral government employees.
On Monday, the IRS and the Department of Homeland Security formalized an agreement that enables immigration authorities to access taxpayer data to help locate undocumented immigrants.
The Washington Post reported that Treasury Department officials, who oversee the IRS, had largely marginalized Krause during negotiations over the data-sharing deal, likely because they anticipated her opposition to the plan.
Despite internal objections, including warnings from IRS lawyers that the new arrangement might breach federal privacy statutes, Treasury Secretary Scott Bessent and Homeland Security Secretary Kristi Noem moved forward and signed the agreement, according to the report.
A Treasury Department spokesperson, in an emailed confirmation of Krause’s resignation, stated, “Melanie Krause has been leading the IRS through a time of extraordinary change.”
Without directly addressing the controversial agreement, the spokesperson also emphasized that the agency was “in the midst of breaking down data silos that for too long have stood in the way of identifying waste, fraud, and abuse and bringing criminals to justice.”
Krause’s exit follows the earlier resignation of Doug O’Donnell, who stepped down after refusing to authorize a similar data-sharing pact with Homeland Security in February. Before O’Donnell, the last Senate-confirmed commissioner, Danny Werfel, resigned on President Donald Trump’s first day in office.
According to a source familiar with her decision, Krause plans to take advantage of a deferred resignation option currently available to IRS employees. The individual, speaking anonymously, confirmed to Reuters that her resignation was partly motivated by the finalization of the contentious agreement.
Additionally, the IRS began rolling out massive staffing cuts on Friday, including the dissolution of its civil rights division and mass layoffs that could slash up to a quarter of the agency's workforce.
These layoffs are part of a sweeping reform effort across the federal government, which has already eliminated over 200,000 jobs. President Donald Trump has tasked billionaire Elon Musk with leading this restructuring through his Department of Government Efficiency (DOGE).
Earlier this month, Musk spoke with Texas GOP Sen. Ted Cruz and described “magic money computers” inside the federal government that are responsible for generating payments “out of thin air,” leaving many lawmakers unaware of the true extent of government spending.
During Cruz’s podcast, Musk disclosed that there are 14 such systems within the Treasury Department and other agencies, sending significant sums without sufficient accounting records to back them up.
Musk asserted that in departments using these “magic money computers,” the discrepancies could represent up to 5 percent of their total reported budgets. Cruz speculated that the overall amount of such improper payments could reach “trillions” of dollars.
“They’re mostly at Treasury,” Musk explained, referring to the systems uncovered by his Department of Government Efficiency, “but there’s some at [Health and Human Services], there’s one or two at State, there’s some at [the Department of Defense].”
“I think we’ve found now 14 magic money computers. They just send money out of nothing,” Musk reiterated to Cruz.
Elaborating on the situation, Musk pointed out that these systems hinder the Treasury Department’s ability to provide lawmakers with a full and accurate picture of federal expenditures.
“You may think that government computers all communicate with each other, synchronize, and accurately calculate where funds are going, making the numbers you see as a senator the real ones. They’re not,” Musk explained.